How I calculated my net worth in 2021

Recently graduated or just a curious individual that wants to start getting a birds-eye view of your finances and net worth?

This article aims to help you jumpstart that journey and nail down specifically how much you need to save, how much you can spend and a "good-enough" estimate of where you'll be every quarter, through the calculation of your net worth.

Note that I am not a certified financial advisor, but a fresh graduate who was curious enough to explore this area, and hopefully my perspective would be equally helpful for someone who does not have a financial planner but wants to start somewhere.

Why is it important to know my net worth?

Your net worth is ultimately a reflection of your assets minus liabilities. Which is simply everything that you have (savings, investments, properties etc.) minus the amount which you owe (credit, loans, insurance premiums etc.).

Knowing your net worth is important as it serves as a good financial benchmark for various things such as how much risk you can take, how prepared you are for emergencies and so on.

How exactly do I calculate my net worth?

So now that you know that being aware of your net worth is important, how should you go about calculating it?

Section 1 - Total Asset calculation

Step 1: Calculate the value of your current assets (Savings + fixed deposits)

Step 2: Calculate the value of your investments (CPF + Securities + Properties)

Step 3: Identify any personal assets that have value too (Pokemon cards / Cars / personal valuables)

Step 4: Add them all up!

Section 2 - Total Liabilities calculation

Step 1: Calculate the value of your current liabilities (credit card balance + insurance premiums etc.)

Step 2: Calculate the value of your long term liabilities (Mortage loan + car loan etc.)

Step 3: Add them up!

Section 3 - Net worth

Take your total assets and minus your total liabilities and congrats! You have a good estimate of your net worth

*Example of how I consolidated my net worth. Feel free to download a copy through the google drive link in the comments

How do I derive more value from knowing my net worth

With your net worth now known, how do you derive more value from this piece of information? One word, projections.

*values used in the graph for illustrative purposes

Through your current net worth, I recommend projecting how much your net worth might be every quarter (I found updating every quarter a good balance between updating it too often / too little). This can be calculated through mainly the few items below:

1. Monthly CPF contributions (derived from CPF)

2. Estimated CPF growth (derived from CPF contribution table)

3. Monthly savings/investments (derived from salary/allowance)

4. Estimated savings/investments growth (derived from average growth or interest rates)

5. Monthly expenses

I found this particularly useful as it gave me a pretty decent idea of how much I should be spending and when is the appropriate time to make a purchase (BTO etc.) It also helped me build a more personalised yet realistic financial goal for myself every quarter (saving goals, investment goals, spending goals etc.), which keep me on track on where I want to be in the next 5 years.

Useful tip

A good proxy for monthly expenses can be your credit card spend, where I consolidate all my spends (subscription, meals etc.) there. (if you are a fresh graduate who just started working and is looking for a credit card with no minimum spends or general cash back card, do consider applying for a Citi Cash credit card through my referral link here)

I roughly spend about $700 to $1000/month on food, subscriptions, shopping and groceries and track this through my credit card spends through the seedly app (download here) as it syncs with my Citi credit card too :)

Final thoughts

There are other areas to take into consideration but I think at the end of the day if you are like me, a young fresh graduate trying to get your financial life together, I trust this is a pretty useful perspective.

If this article helped you and you would like access to the excel sheet that I used, feel free to download it from the google drive link in the comments.

I plan to cover other topics such as tech company analysis, Singaporean housing analysis, CPF breakdown, insurance premiums and coverages, and how to calculate taxes in my next articles so do stay tuned!